[bluGill]

> I felt sorry for the shopkeepers as they had to bear the 1.5%-2% as transaction charges of the total amount paid

I used to feel that way. Then I discovered how much time/effort is spent counting cash. Credit cards are all electronic and so the money goes directly into your bank accounts without needing to count and recount all that cash. Companies are money ahead vs cash once they account for all the labor cash costs. That is before we get into all the costs of theft that you avoid.

The above assumes a straight 2% transaction fee. If you are paying $.25/transaction then for small purchases the transaction costs are way too high.

[jitendrac]

The transaction fees are flat 1.5%-2% for regular credit cards(may climb upto 4% for reward or amex type of premium offerings). The retail grocery business has gross margin of 8-10% which ultimately settles to net profit of 4%-5%. and paying almost half of your net profit for transaction fees is insane. In any case, the government owned non-profit digital payment system is really a great idea. People tend to have increased digital transaction which were unaccounted in the past, which also gives the correct data to government regarding current country financial habits.